The chief executives of Aviva, Admiral Group and NFU Mutual told the House of Lords Financial Services Regulation Committee on Wednesday that most declined home and travel insurance claims result from uninsurable events or customer choices at the point of sale rather than insurer conduct, and warned peers against layering new prescriptive rules on top of the Financial Conduct Authority's (FCA) Consumer Duty.
Jason Storah, CEO of UK & Ireland General Insurance at Aviva, Alistair Hargreaves, Chief Executive of UK Insurance at Admiral Group, and Nick Turner, Group Chief Executive of NFU Mutual, appeared before peers as part of the committee's ongoing inquiry into the regulation of the UK's consumer insurance market, a week after price comparison website bosses used the same inquiry to call for standardised claims data across insurers.
Storah told the committee that Aviva pays 72 out of every 100 home claims it receives. Of the remaining 28, he said around 13 involve wear and tear or a lack of maintenance and are therefore uninsurable, around nine relate to customer choices at the point of sale, such as opting out of cover for personal belongings, and about six are declined for other reasons, including claims that fall below the policy excess.
Turner said NFU Mutual pays around 85% of buildings claims and more than 96% of contents claims, which he said are generally simpler to settle because buildings claims are more likely to involve wear-and-tear disputes.
Storah also described a spike of around 12,000 travel insurance claims during the escalation of Middle East hostilities earlier this year, many of which were declined because customers were able to rebook their flights.
Hargreaves said Admiral's decline figures appear higher because the insurer records any customer query as a claim, including enquiries about events that were never covered, such as roof tiles blown off during bad weather, allowing it to better understand where customers misunderstand their cover.
Asked whether a baseline product standard across the industry would address concerns about "hollowed-out" budget policies, all three witnesses pushed back.
Storah argued that a minimum standard would create a "lowest common denominator", stripping out optional cover such as flood or storm protection that matters to particular customers while reducing competition and innovation.
Hargreaves also rejected suggestions that budget policies are becoming hollowed out, pointing to increases in Admiral's limits for alternative accommodation, personal belongings and contents cover, as well as its "Essentials" motor product, which asks customers to actively confirm whether they want optional features such as windscreen cover.
He argued that competition through price comparison websites, combined with Consumer Duty accountability, already provides an effective framework for delivering value.
Hargreaves confirmed that under the general insurance pricing practices rules, a renewal price cannot exceed the equivalent new-business price available through a price comparison website. He added that customers who contact the insurer directly and provide additional information may still receive a better price, reflecting their expected likelihood of remaining with the insurer.
Storah said the cumulative regulatory burden on insurers had become significant and argued the FCA should focus on pursuing firms that fail customers rather than introducing additional broad-based rules on top of Consumer Duty, echoing concerns raised earlier in the inquiry by the ABI and BIBA..
Turner echoed the point, saying Consumer Duty already gives the regulator "all the power they need to go after" firms that are not compliant, warning that further prescriptive regulation mainly adds costs for firms already delivering good consumer outcomes, costs that are ultimately passed on to customers.
All three executives said insurers remain fully accountable for outcomes delivered through artificial intelligence, regardless of the technology used, and that customers should always retain the option of speaking to a human representative.
Turner described using a large language model to index a 6,000-page underwriting manual, allowing staff to search acceptance criteria and be directed straight to the relevant guidance instead of relying on senior underwriters.
Storah said Aviva was among the first UK insurers to trial ChatGPT-assisted quoting, an experiment he said increased online quote-completion rates from around 50% to more than 90% by allowing customers to describe what mattered most to them rather than working through a fixed sequence of questions.
